Why Your Own Online Merchant Account is Better than a Free Merchant Account

Whenever we see ’Free’ we, almost automatically, click the link. How many of the times we have clicked the link we actually got something free of charge? Hardly ever. Free Ecommerce online merchant accounts cannot be free. The only part that is provided at no cost in these merchant accounts is their membership or setup fee. Please note that this article covers the average free e-Commerce merchant account service found online; i.e. there are many good providers but they are few in number. Compared to ’paid for’ or commercial Ecommerce merchant accounts free accounts can be seen as better, being free. This is not the case. Free merchant accounts have many advantages, but the disadvantages of such accounts can be discouraging, leading us to think twice before signing up for a free e-Commerce merchant account. It is important to realize, again, the fact that such accounts aren’t free and you will still pay for using them.

Free merchant accounts, usually, involve no initial payment, no membership payment, and no setup fee. This means that you will, most probably, pay nothing to register and get the relevant gateway setting information and setup guide. The ’dark’ side is that the $0 registration is compensated by the high processing rates and chargeback rates. Doing some comparison and research it can be easily discovered. For instance, the average transaction fee for an average free merchant account is $1.00 + 5% of the transaction amount. This means that from your $100 that your customer has paid you will get $92 [5% = $5.00 + $1.00 = $6; $100 (income) - $6 (expense) = $92]. This is with average, almost minimal transaction rates. Transaction fee rates of as high as 9% and even 14% can be encountered. Commercial e-Commerce merchant accounts charge as low as 3.5% + $0.20. This clearly indicates that commercial merchant accounts have better money-saving potential than free e-Commerce merchant accounts. Chargeback fees and rates may also seem a lot harder than those of bought merchant accounts. The reason for considerably higher fees is that every e-Commerce merchant account service provider is a business, and as any business it has to prosper. Underpaying for something (or not paying for something) leads to having to overpay for something else. The variability in percentages would not be noticed when doing low volumes, but as soon as you start processing thousands of dollars you would feel the difference.

If you find a free merchant account that has great terms and seems to be good you might be in for a surprise when you find out that absolutely no or little support is offered. Some would not care. Credit card processing and e-Commerce merchant accounts (free or commercial) involve complex shopping cart ’ gateway ’ bank communication. The setup and integration of shopping carts which may seem an easy and accomplishable task is indeed not. The security issues involved may be so difficult to understand that without professional help you will most surely fail to install and hook up a shopping cart to a gateway. Decent free merchant account providers will offer some kind of help by e-mail, others will not. Help and support is inevitably included into the monthly membership fees or into the registration fee of your own merchant account. Be sure to check whether technical support is offered of not when applying for a free account. This fact is overlooked which leads to losing profits due to incorrectly setup communications.

The above disadvantage may also lead to concern about security and stability issues of free shopping cart systems and gateways. You own merchant account will offer maximum security, especially if it is re-engineered by the company to fit your existing website. Commercially available e-Commerce merchant accounts seldom are unstable. As soon as any sign of instability is perceived the providing company will usually fix the problem instantly. The responsibility that your own merchant account providers have is usually greater than that of free merchant accounts. You will surely agree that trusting some shady free merchant account is not worth the risk. Once again, there are many good free accounts out there having their pros and cons.

Free merchant account providers may just annul your contract. Free merchant accounts will return no money, as money was not paid to join them and obtain their merchant account service. You are liable to lose your free merchant account as quick and easy as you gain it. Most often, there are absolutely no guarantees contrary to normal e-Commerce merchant accounts which guarantee to service your business as long as you follow their rules, regulations and limitations. A money-back guarantee is usually offered unlike free credit card processing providers.

You own merchant account, which is paid for, may be very flexible in terms of processing fee to processing volume ratios, limits, etc. The choice of, for example, offshore banks working on different terms may exceed hundreds of banks, letting you choose the best account for you. Free merchant accounts offer one specific provider regardless of your business type and other issues involved. The type of merchandise you provide may be unsupported by free merchant accounts. For example, some free accounts do not let you sell software; others will let you sell only software. This makes free e-Commerce merchant accounts inflexible.

You own merchant account vs. a free merchant account. Who would win? The answer isn’t that simple. If you’re looking for a great service on the whole, with lower rates, and you’re processing considerable credit card payments then your own account is recommended. On the other hand, if you own a small business, just starting, and you need to accept credit cards, ready to pay as much as 10% for processing ’ free accounts are for you. In no way are we trying to discredit free e-Commerce merchant accounts. We are simply shedding some light upon the fact that so-called free merchant accounts aren’t always what they seem to be. You are on the path to profits whether you choose a free merchant account or pay and buy your own merchant account for your website.